Author Topic: Worried about my debt. Need a couple of questions answered....  (Read 4792 times)

Robert

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Hi

I'll start by explaining my situation. Around four years ago I took out an unsecured loan of £20,000. A few months later I lost my job and struggled to keep up with the payments. It all got a bit much and I panicked. Instead of doing the sensible thing and seeking debt advice, I packed my bags and left the country. I know it wasnt necessarily the ideal solution, but I was young and scared. I've been abroad for four years now and I've never heard anything from the bank or anyone else concerning the debt, so they obviously dont know where I am as I never told anyone where I was going. I've decided it's time to sort it all out as I desperately want to move back to the UK. But there are a couple of questions I need answered before I can go back.....


1) Will my debt have increased a lot? One of the major reasons I've been so scared to return sooner is that I'm afraid to find my debt has increasd to a ridiculous, unpayable amount. Will they have continued adding on interest? If the debt has been sold to a DCA, will they keep adding interest?....or loads of other charges?


2) Can I offer them a lower amount as a settlement? How much do you think they would realistically accept?


Thanks

James Falla

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Re: Worried about my debt. Need a couple of questions answered....
« Reply #1 on: Mar 07, 2011, 04:42:51 PM »
Hi there Robert
 
It is almost certain that the banks you owe money to have added additional interest and charges to you accounts. As such, your balances will have increased but it is difficult to say by how much. If you are kean to sort things out, the best thing to do would be to start contacting your creditors and finding out where you stand. They may well be open to an offer to settle the debt particularly if you plan to remain abroad where collecting from you will be difficult and costly for them. Generally speaking I would consider starting offers of settlement at around 40%-50% of the amount owed.
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Robert

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Re: Worried about my debt. Need a couple of questions answered....
« Reply #2 on: Mar 07, 2011, 06:32:33 PM »
Hi James

Thanks for the reply. I know theres no way of you knowing exactly how much I now owe but roughly, what do you reckon? The original debt was £20,000, and that was four years ago. So would it be a couple extra thousand or would it have more likely doubled? Because if it has'nt gone up too much then I would like to pay it off, but if its doubled then I guess my only option would be bankruptcy, which Id rather avoid.

Also, I've been abroad for four years now(in an EU country) and I've never been traced. I've always found this a bit suprising as I always imagined a SWAT team will come crashing through my windows any day. You said collecting from abroad is difficult and costly for them, so do they even bother trying to trace you abroad? Or is a £20,000 debt not worth the hassle and costs for them?

James Falla

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Re: Worried about my debt. Need a couple of questions answered....
« Reply #3 on: Mar 08, 2011, 03:39:22 PM »
Hi Robert
 
It really is very difficult to tell how much your debts would have increased. I would be surprised if they had doubled in four years, but it is certainly possible that they have increased by around £5000. One option you may be able to employ is to request a copy of your credit file. You can do this online with Experian, Equifax and CallCredit however I am not sure how this would work given that you are living abroad.
 
I terms of you being chased, you are pretty much right. The expense of trying to trace you overseas and then actually trying to enforce the debt is not worth a creditor's while unless they stand to gain considerably. As this is unlikely based on the amounts that you owe, it is not surprising that you have heard nothing.
 
If you come back to the UK and want to sort things out, then bankruptcy is one option. However, you could also consider an individual voluntary arrangement (IVA) or debt management plan (DMP). You would probably be able to make an IVA work for £200-£250 a month. This payment would last for 5 years and then you would be debt free.
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Robert

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Re: Worried about my debt. Need a couple of questions answered....
« Reply #4 on: Mar 08, 2011, 08:14:06 PM »
Thanks James, this is really helpful. Im going to look into trying to get a copy of my credit file to see how I stand. Like I said, the reason I want to sort this out is because I desperately want to move back to the UK as soon as possible. But its been 4 years already and I've heard that after 6 years the debt can become statute barred. Im not keen on spending another 2 years abroad, but if there was the possibility of having my debt wiped then I suppose it would be worth consideration. Could my debt be wiped after 6 years?

James Falla

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Re: Worried about my debt. Need a couple of questions answered....
« Reply #5 on: Mar 09, 2011, 04:21:42 PM »
Hi Robert
 
There seems to be a lot of miss-information around currently about statute barred debts. You need to be clear that debt will not somehow be magically written off or become statute barred if you have made no payments for 6 years. The only way a debt can become statute barred is if the actual creditor in question decides to no longer try and collect what they are owed and takes no further action to do so for six years. This situation is highly unlikely to occur as your creditors will almost certainly have taken action to collect the debt from you in the last 4 years. It is not their fault that they do not know where you are....
 
You are doing the right thing by getting a copy of your credit file to see what the actual situation is. The best way to resolve your debt problem is thn to consider either a DMP, IVA or bankrupty on your return to the UK. Of course, to do an IVA or DMP you would need some income. If this is not realistic then bankruptcy might be the right way forward.
 
Let us know how you get on with your credit file.
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Robert

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Re: Worried about my debt. Need a couple of questions answered....
« Reply #6 on: Mar 09, 2011, 07:32:17 PM »
Hi James

So the debt would not be statute barred if I dont make contact for 6 years? Only if they havent chased me, is that right? How do they prove they have chased me for the debt? And do you think it's realistic that they would accept small payments, like £50 a month?

Thanks

James Falla

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Re: Worried about my debt. Need a couple of questions answered....
« Reply #7 on: Mar 10, 2011, 06:08:12 PM »
Hi Richard
 
Yes, a debt is only statute barred if the creditor themselves has chosen not to contact you. If you have moved around and not given them a new contact address it is very difficult to prove that they have not tried to contact you. Generally speaking I advise people that if they have debt from a commercial bank it is almost 100 percent certain that the bank will have tried to collect it during the last 6 years. Banks are well aware of the issue they face with statute barred debts and endeavour not to fall faul of this if they can help it.
 
In terms of accepting small payments, yes a creditor will always be prepared to accept small monthly payments. This is in essence a debt management plan. However, whether they can be pursuaded to stop further interest or charges will depend on your financial situation and whether they believe you are making your best effort to pay them.
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Robert

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Re: Worried about my debt. Need a couple of questions answered....
« Reply #8 on: Mar 11, 2011, 02:58:53 AM »
Hi James

Thanks for the help. I've saved up a small amount of money in the last 4 years so I think I'll first try offering them a one off payment and I'll see how that goes. Just two more questions, both totally hypothetical as I just booked a one way flight back to the UK for next month.

1) What would happen if I just stayed abroad? Continued working, maybe bought a house and just carried on living a normal life. Would they ever find me?


2) Would the debt continue to grow due to interest and so on? Where does it end? I mean, if I stayed out here for 30 years and then came back, would the debt have continuously grown to a huge amount? Sorry but it confuses me.

Thanks

shocksoc335

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Re: Worried about my debt. Need a couple of questions answered....
« Reply #9 on: Mar 12, 2011, 07:29:51 AM »


Hi

You can be pursued for a debt in another country as long as the UK have a reciprocal agreement with them, this means that a creditor can take court action against you in a Country you reside. Its unlikely though as they haven't bothered yet!

If you just remain there as long as you have not made a payment towards the debt or acknowledged it the debt will become statute barred see factsheet on the national debline website on the 'limitations Act'.

Finally unlikely an IVA will be an option for you as you require usually at least three debts across at least two different creditors - if you have only one its likely they can vote against it.
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Robert

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Re: Worried about my debt. Need a couple of questions answered....
« Reply #10 on: Mar 12, 2011, 06:16:01 PM »
Hi ShocksockThey havent taken court action against me in my new country because I assume because they dont know where I am, as I never left a forwarding address.  I always assumed they would trace me quite easily but it's been 4 years now, and not a word. I guess a £20k debt is not worth it. Plus, for all they know, I could still be in the uk. And even if they knew I left the country, there are 196 countries in the world, so where would they start looking? As you can probably tell, Im no expert, but it seems to me that unless they know for sure where you are or you owe a huge amount(£50k plus), then they most likely wont even bother looking abroad.

shocksoc335

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Re: Worried about my debt. Need a couple of questions answered....
« Reply #11 on: Mar 13, 2011, 05:28:41 AM »
If they want to they will and 20k is a large debt!

If court action has been taken remember they can recover after the 6 year period once they request leave from the court. We can't second guess what they are going to do really. Be aware of the facts though!
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James Falla

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Re: Worried about my debt. Need a couple of questions answered....
« Reply #12 on: Mar 14, 2011, 12:13:01 PM »
Hi Robert
 
As Shocksoc says, a creditor could persure you abroad for an unpaid debt of £20k. However, in my experience they would not do so. The debt would have to run into the 100s of thousands and/or they would have to be really sure that you were sitting on realisable assets before it would become worth their while to come after you.
 
However, as you are now coming back to the UK, that is no longer particularly relevant. I guess the real question is what will you decide to do when you get back. My advise would be don't simply ignore the debt and hope it will never re-appear. Generally speaking it will particularly if it is sold on to a debt purchasing company. They are much hotter at chasing old debts as they do not have to get much of a return to make it worth their while.
 
If you have saved up a small amount of money then offering a one off settlement payment is a very good idea. Particularly as you have no assets, you can truthfully argue that if they do not accept you will declare bankruptcy where they will get little or nothing. As such a lump sum setlement could be attractive.
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Robert

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Re: Worried about my debt. Need a couple of questions answered....
« Reply #13 on: Mar 14, 2011, 04:13:13 PM »
Hi James

Im coming back to the UK next month with a few thousand saved up, so I think offering a one off settlement payment is a good idea. Im now just wondering how much to offer and how much they would accept. Thanks for all the advice, I'll let you know how it works out.

As for the subject of running/hiding from debt, you're right, it is no longer relevant. I was just saying that although Im sure the creditor could persure me abroad for the £20k if they wanted to, its probably unlikely in my circumstance as they dont even know where I am. I recently spoke to a man who's story was very similar to mine. He told me he had a £55K Debt in the UK. Unable to pay, he ran off down to spain without leaving a forwarding address and lived there for five years hassle free. He then decided that he would come back to the UK but continue avoiding the debt. He said they found him within a month of moving back. Im no expert but this, along with my own experience, leads me to believe that most DCA's wouldn't even know you left the country, and even if they did, they would rather lie in waiting for your return than chase you abroad.

Thanks

James Falla

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Re: Worried about my debt. Need a couple of questions answered....
« Reply #14 on: Mar 15, 2011, 12:03:31 PM »
Hi Robert.
 
It is always difficult to know what to offer as a lump sum. However, I would generally be confident that you could always do a settlement deal based on 50% of the outstanding debt. However, you should always start lower than this. Also I assume you do not actually have £10k. Ultimately £5 could could swing it if you argue that the alternative is they get nothing in bankrupty.
 
As a point of interest, I agree with you in terms of creditors chasing money from someone who has gone abroad. Generally the DCA would not even be aware you had left. Even if they did become aware, for smaller debts is is really unusual to chase overseas because of the costs involved. Employing tracers and then local collectors & solicitors etc etc. I have only really ever come across situation where the sums involved are very large.
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